Issue Brief

U.S. vs. Japan: Residential Internet Service Provision Pricing

U.S. Residents Pay More and Receive Lower Speeds
June 24, 2009 |
  • The following chart lists the price, download and upload speeds of residential Internet services in the U.S. and Japan.
  • NTT (Nippon Telegraph and Telephone) is the major incumbent telephone operator in Japan. NTT has focused on fiber-optic business while Yahoo! BB (a subsidiary of SoftBank Telecom Corp.) has had first-mover advantage for DSL Internet. Due to unbundling requirements, Yahoo! BB and @nifty provide DSL service by renting NTT’s telephone lines at low prices.
  • Cable/DSL service
    • In the U.S., the price for cable or DSL (1Mbps-7 Mbps) ranges from roughly $20-45/month. Comcast has higher speed Internet, 15Mbps-50Mbps, and costs $43-$140 per month
    • In Japan, the typical Internet speed is higher than the U.S. (8Mbps-50Mbps), and costs $30-60 per month. J:COM, a large cable Internet provider, has cable Internet up to 160Mbps, costs $63 ($0.4 per megabit).
    • The high-speed Internet market is very competitive in Japan. Customers who pay two dollars more can upgrade from 8Mbps to 12Mbps or even more. For this reason, customers tend to choose higher speed Internet because the marginal costs are low.
  • Fiber-optic service
    • In the U.S., Verizon is the only large provider of fiber-optic service, FiOS. There are three options of the service, 15Mbps, 25Mbps, and 50Mbps, $50-$145 per month.
    • In Japan, the average of fiber-optic speed is up to 100Mbps~1Gbps, costs from $25 to $56 per month ($0.06-0.7 per megabit) for condo residences (up to 6 households or so) depending on VDSL/LAN/Fiber distribution; single house residences are charged higher rates, $55-67($0.03-0.6 per megabit), which is both much cheaper and much faster than the U.S.

For these price comparisons, 1 Japanese yen=0.01 US Dollars (June 11, 2009)

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Table 1: Cable Internet Pricing Comparison
This chart compares Comcast, Nifty and J:COM’s cable internet service and pricing. J:COM has the fastest cable Internet speed of 160Mbps at the monthly charge of $63. Its price per Mbps is the cheapest, $0.4, among other services.

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Table 2: DSL Internet Pricing Comparison
The chart compares DSL Internet between five U.S. and Japanese providers. Japanese providers: NTT East, Yahoo BB and Nifty apparently have incredibly cheap price $1 per Mbps comparing to AT&T and Verizon, $6-9.

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Table 3: Fiber Internet Pricing Comparison
There is a discrepancy between the U.S. and Japan’s fiber Internet service. Verizon’s FiOS’s fastest fiber service is 50Mbps at the price of $145 while NTT East is providing 20 times faster fiber Internet up to 1Gbps in both download and upload stream and charging only 1/3 price, $39, per month for condo residences.